The paper's practices have come under huge scrutiny prompted by a string of court cases related to phone hacking.

Owner News International said it would act if shown new evidence of wrong-doing. Mr Marunchak denied involvement.

It is believed Mr Hurst was targeted as he had worked in British Army intelligence running IRA informers in Northern Ireland.

Panorama obtained details of e-mails from Mr Hurst's computer that were sent to the News of the World's Dublin office by fax, and identified the man who accessed them by using a Trojan virus contained in an e-mail.

He was a former colleague of Mr Hurst who had served in the same undercover unit, who cannot be named for legal reasons.

A meeting between the pair was secretly filmed. The hacker identified Alex Marunchak as the News of the World man he was dealing with.

Ian Hurst said: "I'm old enough and ugly enough to tell you quite clearly and candidly that I am shocked."

Police leaks

Making unauthorised modifications and gaining unauthorised access to someone's computer are both illegal under the Computer Misuse Act.

Alex Marunchak left News International later in 2006 - not 2009 as originally reported - after 25 years. He said: "I have never met with a private investigator whom I asked to hack into computers to obtain confidential e-mails or other information.

"It is absolutely untrue any unlawfully obtained material was ever received by me at the News of the World's offices in Dublin."

But the programme also has evidence that while at the paper he paid agency Southern Investigations for a number of "exclusive" stories plainly based on confidential police material.

Find out more

Panorama: Tabloid Hacks Exposed is on BBC One 2030 GMT, Monday 14 March

Police surveillance transcripts from 1999 showed that other papers, including the Daily Mirror had also used the agency to obtain information.

The Daily Mirror said its journalists had last used the agency in 1999, and it had not seen evidence that this involved them breaking the law.

The
News of the World
responded: "As demonstrated by recent events, we will not tolerate misconduct by staff and will act decisively when presented with new evidence.

"To date, Panorama has provided us with no evidence of wrong-doing in relation to the private detectives featured.

"The overarching principle is that we work in the public interest, within the PCC's (Press Complaint Commission's) code of conduct and the law."

If you've got to get a story, you've got to get it and you have to get that by whatever meansSean Hoare, Former NoW reporter

But former News of the World reporter Sean Hoare, who has publicly admitted his part in phone hacking, told Panorama: "It was endemic, you know, it happened.

"People were scared. So if you've got to get a story, you've got to get it and you have to get that by whatever means.

"That is the culture of News International."

In another case involving newspapers, private detective Stephen Whittamore was jailed for running specialists who hacked in to government department, British Telecom and police computers - and records showed 35 newspapers and magazines had used his services.

The Daily Mail had asked for information 850 times, News International 1000 times. The Daily Mail said it banned the use of private investigators after the case.

Deputy information commissioner David Smith said about the Whittamore case: "There's absolutely no doubt that a lot of the information that was being sought and was obtained could only be obtained illegally."

The latest revelations come after other recent developments over phone hacking allegations.

In January 2007, News of the World royal editor Clive Goodman was jailed for four months for conspiracy to access phone messages left for royal aides.

Private investigator Glenn Mulcaire was jailed for six months on the same charge.

The paper's editor Andy Coulson, who has denied knowing the practice was taking place, resigned over the affair but went on to become David Cameron's director of communications.

The News of the World said it would not tolerate misconduct by staff and would act decisively

He has since stepped down, saying it was impossible for him to do the job whilst the controversy continued.

However police reopened the case in January, after a NoW internal inquiry allegedly uncovered four e-mails showing its assistant editor (news) Ian Edmondson apparently had knowledge of phone hacking, and he was sacked.

The Met told Panorama that it would be inappropriate to comment on the new ongoing investigation.

Labour MP Tom Watson has since called for the newspaper's chief reporter, Neville Thurlbeck, and a former news editor, Greg Miskiw to also be investigated.

A cross-party House of Commons Culture, Media and Sport Committee report in February 2010 accused the NoW of "collective amnesia" over the extent of illegal phone hacking.

Four alleged phone hacking victims have reached out-of-court settlements claims against the newspaper, including celebrity publicist, Max Clifford, who received a reported £1m.

Fourteen people, including football agent Sky Andrew, comedian Steve Coogan and sports commentator Andy Gray are now suing News International, and it was recently ruled Glenn Mulcaire must give evidence in other cases.

Celebrity lawyer Mark Thomson said: "The police now are interviewing all the victims. So finally the police are doing a proper investigation.

"The problem for the police is the more successful their current investigation, the more it will ask questions about what happened before."